Bell FX Currency Outlook: The Australian Dollar has traded in a very narrow range overnight as US markets were closed for the Martin Luther King Jr. holiday.

Australia: With all US markets closed for the holiday, attention centred on Europe where European finance ministers gathered for the first time in 2013 in Brussels to discuss how the ECB and the ESM (European Stability Mechanism) will work together to aid those banks and governments that experience problems in raising funds on the international markets.

Today we will see the outcome of the two day Bank of Japan meeting where it is widely expected further fiscal stimulatory measures may be introduced to weaken the JPY.

Depending upon what is announced we could see some movement in the AUD although we doubt any move will be significant.

Tomorrow in Australia we will see the announcement of the Q4 CPI result (a figure of 0.4% is widely forecast) which is the only major announcement locally until the next RBA meeting on Tuesday February 5 where it is generally expected there will be no cut in the 3% cash rate.

Majors: European equity indices were all generally higher overnight but on considerably less volume than usual due to the US holiday.

The German Bundesbank was a bit more positive on the prospects for German growth in the near term although further weakness in the GBP versus the USD suggests the UK economy is still struggling.

The GBP traded to a new low of 1.5805 versus the USD as some reports circulated the rumour that the UK might leave the European Union.

Japan is the focus in trading today where it is widely expected that the Bank of Japan will raise their inflation target from 1% to 2% as further stimulus is introduced.

There was some doubt in the market that this would happen as the JPY rose from a two year low versus the USD.
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